Monthly Archives: February 2010

There was general agreement during yesterday’s White House summit that more needs to be done to combat fraud in health care. During the seven hours of discussion, fraud came up a few times, but there no was substantive ideas or proposals put forth, with the exception of using undercover patients — like mystery shoppers — to trap crooked doctors.

The one remark that caught our ear was Sen. Tom Coburn’s assertion that there’s only one percent of fraud in the private health insurance market. He mentioned this during a hearing back in the summer and we were not able to track any credible source for this number. If his assertion was found to be true, many SIUs in health plans likely would be out of work.

Anyway, we’ve plowed through the seven hours of transcripts and came up with the following comments dealing with fraud:

Rep. Nancy Pelosi: “And I want to say, because Medicare was mentioned, unless we pass this legislation, we cannot keep our promises on Medicare. We simply must make the cuts in waste, fraud and abuse in Medicare so that the benefits and the premiums are untouched. “

Sen. Tom Colburn: “So when you break down the costs, what we know is 33 percent of the costs in health care shouldn’t be there. And how do we go about doing that? And what are the components of that cost? And when you look at, when it’s studied, if you look at what Malcolm Sparrow from Harvard says, he says 20 percent of the cost of federal government health care is fraud. That’s his number.

“If you look at Thomson Reuters, when they look at all of this, they say at least 15 percent of government-run health care is fraud.

“Well, when you look at the total amount of health care that’s government run, you know, you’re talking $150 billion a year.

“So tomorrow, if we got together and fixed fraud, we could cut health care 7.5 percent tomorrow for people in this country.

“How do we do that in terms of creating an elimination of fraud?

“You know, when you compare the private sector fraud rates, it’s 1 percent compared to Medicare and Medicaid. You know, there’s estimates that there’s $15 billion worth of fraud in Medicaid a year in New York City alone.

“And we ought to do it by not creating a whole bunch of new government programs, but by creating an incentive to reward people. In your new bill you have good fraud programs, but you lack the biggest thing to do. The biggest thing on fraud is to have undercover patients so that people know we’re checking on whether or not this is a legitimate bill. And you don’t know who’s an undercover patient and who’s not. And all of a sudden you start changing your attitude of whether or not you’re going to milk Medicare or you’re going to milk Medicaid.”

President Obama: “Every good idea that we’ve heard about reducing fraud and abuse in the Medicare and Medicaid system, we’ve adopted in our legislation. So that’s an example of where we agree. We want to eliminate fraud and abuse within the government systems.

Rep. Steny Hoyer: “We want to go after fraud, waste and abuse.”

Sen. Max Baucas: “And fraud and waste, we talked about that. We have major provisions in our bill to (inaudible) fraud and waste. Mr. President, I compliment you because in your proposal, you go even farther.”

Rep. Rob Andrews: “Fraud — the president has a proposal that says we should have a database. If you’ve committed fraud against Medicare once, you can’t make a contract again.”

Sen. Chuck Schumer: “And the real nub of this is how do we wring that waste out, that fraud, abuse, duplication, without interfering with the good care that we want every person on Medicare, Medicaid and private insurance to get?

“The average citizen knows this happens. How many times, when you look at your medical bill, you’ve undergone a minor procedure, and you see Dr. Smith, $4,000, and you sort of vaguely remember he just waved and poked his head in the door?
Or how about — probably it’s happening right now — there’s some salesman talking to some doctor and saying, “Hey, my company will finance a machine for you for a million dollars. So you don’t have to pay for it. You can gradually pay it. We’ll show you how to fill it up all the time and you’ll increase your income by $200,000.” And there’s another machine three blocks away that’s already working and available.”

Sen. Jon Kyl: “And it’s not a matter of just saying we all agree on the goal of reducing waste, fraud and abuse. We all do, of course. It’s how you do it.”

Rep. Xavier Becerra: “We have any number of provisions that deal with the issue of fraud, which it says at least totals $60 billion. And working with some of our Republican colleagues, we are doing exactly that, going after the waste that’s in the system, certainly the fraud. And that’s how we extract the number of the savings.”

Maryland looks like it may become the 26th state to enact a full-fledged false claims act to clamp down on medical providers that defraud government programs. I attended a hearing on the issue before a senate committee this afternoon where proponents for the bill, SB 279, voiced strong arguments for the state to adopt this measure.

After a disappointing one-vote loss in the state senate last year, Gov. Martin O’Malley seems determined to have a better outcome for this false claims bill in 2010. He sent his lieutenant governor to the hearing along with a bevy of other top officials to make the case for this remedy that likely would add millions of dollars to the state treasury.

Sponsors also brought in officials from Delaware and Texas who recounted how well their states have fared using false claims acts. They also countered arguments put forth by opponents that enacting this new remedy would lead to frivolous lawsuits and a litigation explosion. Experience in other states suggests these are hollow arguments.

Leading up to the hearing, O’Malley reached out to medical providers in the state to try to ease some of their reservations for his proposal, including adding compromises to the legislation. Further amendments likely will be added, but hopefully none that will weaken its impact.

The Coalition issued a statement supporting the bill, saying it would serve as a deterrent and a powerful incentive for medical providers to have strong compliance programs and to “play by the rules.” False claims acts help detect fraudulent schemes that otherwise might not ever be known because they allow insiders to blow the whistle and initiate civil actions. Since the mid-1980s governments have recovered more than $20 billion from health care organizations through false-claim actions.

The White House posted its new healthcare reform proposal online this morning, and it includes a few interesting anti-fraud proposals. Among them:

• A comprehensive sanctions database of providers in Medicare and Medicaid,
• Registration and background checks of billing agencies and individuals who bill the federal government,
• Expanded access to the healthcare integrity and protection data bank, including access for the private sector,
• Holding Medicare contractors liable if they pay fraudulent claims,
• Prohibiting medical providers who defraud from using bankruptcy as a means of not paying restitution,
• Enhanced technology for real-time data review,
• Stronger penalties for medical ID theft, and
• Establishing a CMS-IRS data match to identify fraudulent providers.

Some of these are existing proposals in the President’s current budget proposal, mainly to address Medicare fraud. Others come from committee amendments (including some Republican proposals) that were offered earlier. We would have liked to see the amendment to create a stronger public/private partnership, but all in all, this is a good start. We’ll be watching C-SPAN on Thursday during the White House summit to see if further anti-fraud ideas are broached.

If you happen to be one of the unfortunate souls homebound due to blizzard conditions (like me and my staff), it might be a good night to get caught on your television viewing. CNBC’sAmerican Greed program will feature one of the worst insurance fraud cases of all time.

Black Widows tells the tale of two grannies in California who help out old men down on their luck, offering friendship, shelter and food. In reality, Helen Golay and Olga Rutterschmidt were con artists who took out life insurance policies on innocent old men and then had them killed.

Golay and Rutterschmidt, who are both serving life sentences in a federal prison, were inducted into 2008 Insurance Fraud Hall of Shame. American Greed airs at 9 p.m. eastern time on CNBC. Happy viewing.

How desperate (or dumb?) do you have to be to get a buddy to shoot you in the leg in order to file a workers comp claim? That’s what Pierre Lamont Taylor did while working for UPS in Baltimore. He and his cousin, Joseph Francis Brooks, got the idea one day while watching television. Brooks shot Taylor to stage a robbery. UPS’ insurer paid out a cool quarter million to Taylor who shared his payday with his cohort and everything was fine until a friend spilled the beans to Maryland state police.

Brooks was sentenced last week by a judge who said the scheme by the pair “ranks as one of the dumbest things” he’s seen in all his years as a lawyer, prosecutor and judge.

Recent workers comp scams have become more brazen, dumb and sometimes violent. A handful are detailed in this month’s web featurehighlighting prominent and interesting cases. Some are laughable, some sad, but all hurt the integrity of this needed line of insurance, as this month’s article concludes:

People who defraud the workers comp system — whether they’re workers, employers or medical providers — increase already expensive insurance premiums on businesses, many of which already are on the edge of solvency. This prevents them from expanding their businesses and hiring new employees — something this nation desperately needs right now. Workers comp fraud also is an affront to the truly injured workers and makes it harder for them to get the compensation they deserve.

Good Morning America aired an excellent segment this morning warning viewers about bogus health discount plans and limited benefits plans. Scam artists are taking advantage of the perfect storm of high health care costs, people losing jobs (and thus, their health coverage) and consumer’s not knowing the difference between these plans and full-blown coverage.

The Coalition’s Jim Quiggle brought this story to GMA several weeks ago after our research started showing the number of cases surfacing around the country was growing at an alarming rate. This looks like a full-blown national scam that could rival the last wave of bogus health plans that defrauded more than 200,000 Americans.

Much more public awareness (and action by regulators and law enforcement) is needed to stem this wave.